A state board rejected a plan Tuesday by Advocate Aurora Health to combine with Southern system Atrium Health — but will revisit the issue in coming months.
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Advocate and Atrium announced plans in May to unite to create one of the largest health systems in the country, with 67 hospitals and more than 1,000 sites of care across six states.
Advocate submitted applications earlier this year for the change to the Illinois Health Facilities and Services Review board, which typically must approve hospital mergers and sales. The board, on Tuesday, voted 3-2, not to approve the applications. Board members later voted at the same meeting Tuesday to reconsider the issue, which could happen at the board’s next meeting in December, or potentially earlier, said board administrator John Kniery.
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Board members said their concerns related to the availability of information and their understanding about the deal, said Mark Silberman, a partner at law firm Benesch and former chief counsel for the state board, who is not involved in the deal but attended the meeting Tuesday. The board voted to table their next vote on the issue until Advocate could address those concerns.
Advocate did not immediately provide comment Tuesday.
Under the proposed deal, Advocate Aurora and Atrium would form a joint operating company to be called Advocate Health, though Atrium’s hospitals would keep the Atrium name, Advocate’s Wisconsin hospitals would keep the Aurora name, and its Illinois hospitals would still be called Advocate. No money would change hands, and existing assets would remain in the states where they are now.
Advocate Aurora President and CEO Jim Skogsbergh previously told the Tribune the new Advocate would have headquarters in Charlotte, North Carolina, though workers at the current headquarters in Downers Grove and Milwaukee would not be expected to move. Many of those workers are already remote, and it’s not expected that anyone will be laid off because of the deal, Skogsbergh said. Systems leaders said the combination would lead to 20,000 additional jobs.
Some have expressed opposition to the union in recent months, including the Service Employees International Union Healthcare Illinois, which worried it would reduce the quality of health care in the Chicago area while increasing costs, and possibly lead to a reduction in services offered. Also, after the deal was announced, a lawsuit was filed in May accusing Advocate Aurora of anti-competitive conduct, including suppressing competition and raising prices in Wisconsin.
NorthShore attempted to expand several years ago through a planned merger with Advocate Health Care. But the two systems dropped that plan in 2017 after a federal judge ruled in favor of the Federal Trade Commission, which had argued that the two systems together would have had enough leverage to impose price increases on Illinois health insurers. Later that year, Advocate announced that it would merge with Wisconsin’s Aurora Health Care, creating Advocate Aurora Health.
In many cases, researchers have found that hospital consolidation results in higher prices for insurance companies, and those costs can be passed along to consumers through higher premiums and other payments.
